Are you prepared for a retirement that could span decades? It could happen. People are living longer than ever. In fact, the Centers for Disease Control and Prevention reports a higher number of 100-plus-year-olds living in the United States than at any time in history.1 And thanks to advances in medicine and technology, this isn’t just happening in the U.S. A recent Pew survey showed the number of 100-plus-year-old people living in the world has increased to record levels.2
While it’s great that people are living longer, it also means you might encounter additional financial strain because you have more years that need to be funded with savings. If you don’t plan ahead, the later years of your retirement could be challenging. Below are some ways you might be able to prepare for the long haul and ensure that you have enough for an extended, multi-decade retirement:
Don’t be too conservative.
It’s natural to want to protect your nest egg from investment risk. After all, a sudden downturn in the market could limit your ability to generate income and support your lifestyle. But you might want to avoid being too conservative with your investments.
Your assets need to last for decades and also fight inflation. That means you will likely need some investment growth, and growth and risk often go hand-in-hand. If you’re too risk-averse, your savings might not see the growth you need to stay ahead.
Think about developing a strategy that balances growth potential and risk management. For instance, you might consider something like an annuity that can offer growth opportunities and downside protection. A financial professional can help you develop a strategy that meets your goals and your risk tolerance.
Look for guaranteed* income sources.
In retirement, the best income is often the one that’s guaranteed for life. But if you’re like many retirees, your only guaranteed sources of income will be Social Security and possibly a pension. You may have to make up the difference with withdrawals from your savings, which may not be guaranteed.
There are tools available that can help you create your own guaranteed income source. Annuities are just one example of a financial tool that can offer you a guaranteed lifetime income stream. There are many types of annuities, and the amount of income you can generate depends on your specific policy. Again, a financial professional can help you find the solution that best meets your needs.
Don’t rush Social Security.
Despite what most people think, you don’t have to file for Social Security benefits as soon as you become eligible. In fact, you don’t even have to take them when you reach full retirement age (FRA). You can delay filing all the way until age 70, and there are some important benefits to doing so.
Primarily, you will receive an 8 percent increase in your benefit amount for each year after your FRA that you wait to file.3 For example, if your FRA is 66 and you wait until age 70 to start collecting Social Security, your benefit will increase by a total of 32 percent. These extra funds can go a long way toward helping you sustain a long retirement and fight inflation.
Ready to plan for a long, happy retirement? Let’s talk about it. Contact us at Trinity Financial. We can help you analyze your needs and develop a strategy. Let’s connect soon and start the conversation.
*Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values.
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16439 – 2017/2/15